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Setting up a DIFC Foundation

Setting up a DIFC Foundation

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What is a DIFC Foundation?

The DIFC introduced the DIFC Foundation regime in 2018 (DIFC Law No.3 of 2018) as an alternative wealth structuring vehicle for both Muslim and Non-Muslim expats resident in the UAE and international investors that wish to protect their assets and family businesses in the UAE.

A Foundation can be set up to hold a family business, real estate, assets such as artwork, or for a charitable purpose. A DIFC Foundation is the most innovative way forward to control your assets in the UAE.

Why set up a Foundation?

As the UAE is a civil law jurisdiction, DIFC Foundations are becoming increasingly popular. One of the most attractive features is it allows you to own property in Dubai. A Memorandum of Understanding exists between the DIFC and the Dubai Land Department allowing entities such as the DIFC Foundation to purchase real estate registered with the Dubai Land Department. DIFC Foundations are legal entities that can hold wealth and assets on behalf of beneficiaries. International investors (non-residents) or residents of the UAE can structure their assets through a DIFC Foundation.

Structure

There are 4 main parties to a DIFC Foundation:

1. The Founder – Must be a minimum of 1 Founder who creates the Foundation to structure their assets
2. The Council – Formed by the Founder, must have a minimum of 2 members which can include the Founder. The Council's role is to administer the Foundation similar to a Board of Directors in accordance with its Charter and By-Laws.
3. The Beneficiaries – Can be an individual, group, or entity appointed by Founder who will benefit from the assets in the Foundation.
4. The Guardian – Must ensure the Council follows the requirements of the Charter and regulations. The role is supervisory to ensure Council acts in good faith and best interests of beneficiaries.

Registering a Foundation in DIFC

We can assist with the full DIFC Foundation setup and can act as the registered agent. The registration of the Foundation takes place at the DIFC. We can conduct the registration process on your behalf as we can be appointed as registered agents.

Benefits of a DIFC Foundation:
● no corporation tax
● solid governance structure
● privacy and confidentiality
● private wealth management and asset preservation
● succession and legacy planning
● creditor and divorce protection
● mitigates forced heirship rights
● charitable and non-charitable purpose
● low set-up costs

Are there different types of Foundations?

A Foundation is typically formed by a Founder who vests certain assets towards a specified charitable or non-charitable purpose. There are different types of foundations, each based on the objectives behind the creation of the entity:

● objects which are exclusively charitable
● objects which are not charitable
● to provide benefits to persons identified in its Charter or By-laws
● a combination of the above

Each type of Foundation has different governance rules.

Some of the DIFC Corporate Services we provide are:

Advisory Services
We have significant experience in providing advice to families and individuals on wealth structuring and business succession planning.

Company Registration
We will help you set up your DIFC company, and obtain the required license and registrations to start its operations while adhering to DIFC laws and regulations. We can help you with your application process and assist you in acquiring the required registration certificate.

Appointment as a Registered Agent
As a DIFC Foundation must have a registered office in the DIFC, TWS can provide Registered Agent services (being a ‘Qualified Person”) when appointed as the Registered Agent of a DIFC Foundation as we are licensed with the DFSA and have an office in the DIFC. As a registered agent, we can:

1. Register the Foundation and provide the registered address of a DIFC Foundation
2. Prepare the incorporation documentation of a Foundation
3. Submit the By-Laws
4. Be the point of contact for ongoing queries/communication

As a licensed DIFC Corporate Services firm and as TWS is a registered agent in the DIFC we can expedite the company formation/ Foundation process, and navigate you through any legal hurdles.

How TWS Legal Consultants can help?

Having advised clients in wealth structuring strategies for over a decade, you can have confidence that our lawyers will listen to your needs and help you create a robust legacy plan under a Foundation that fulfils your objectives.

Our lawyers can advise and create a Foundation that reflects your wishes for future wealth protection and preservation. We will ensure that it is properly structured to ensure your assets are passed to your beneficiaries according to your wishes. At TWS our lawyers are well versed in the procedures and regulations of the DIFC to ensure a hassle-free Foundation registration process.

To learn more please contact our office at info@twslegal.ae or call +971 4 448 4284.

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